SEC Says Special Care Needed For Investing Seniors

by Peter G. Miller
October 23rd, 2008

Given the tumult in the securities markets it seems appropriate to ask if investment firms should have any special programs for seniors. And the answer, according to the Securities & Exchange Commission, is yes.

What might you expect from investment firms? Here are some of the suggestions from the SEC:

___Increasing the frequency of contact with senior investors to remain informed about changes in investors’ financial needs, employment status, health, and other life events.

___Encouraging securities professionals to talk to investors about having an emergency or alternate contact on file with the firm, such as a trusted family member or other trusted individual.

___Educating investors about the benefits of having a power of attorney and when appropriate, encouraging investors who are in good health to share details of their financial affairs with trusted family members, estate lawyers and/or other professionals to help ensure that if the investor’s health deteriorates, their financial affairs will be properly handled.

___Documenting conversations with investors in case they have problems with lack of recall or to help resolve any misunderstanding.

___Sending follow-up letters to investors after conversations to document and reiterate what was discussed.

___Avoiding financial jargon, using plain language, and having larger font versions of marketing materials available.

___Providing brochures that explain to investors how to identify, locate, organize and store important documents so that they are easily accessible in case of an emergency.

The list above is useful but not quite complete. Where is the parallel list for lenders and mortgage borrowers? Should not those who have reverse mortgages — or are considering them — discuss the same issues with lenders?

For many seniors a house is the largest asset they hold. Given the importance of that asset, why not stronger standards for lenders?

In fact, such standards may emerge in the near future. A national registration system for loan officers is now under development and will be in place in 2009. There is little doubt that over time this system will parallel the licensure systems now in place in several states — with the big difference that a federal program would be nationwide and would apply to virtually all loans.

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